Many executors assume their roles out of personal obligation to a deceased family member or friend, with no expectation of compensation. Nonetheless, all executors are entitled to compensation for their services in administering an estate.
Without any language in a will indicating what the amount of payment should be, Virginia Code § 64.2-1208 tells us that executors are entitled to “reasonable” payment for the work done on behalf of the estate. A committee of The Judicial Council of Virginia created written guidance to help determine what is “reasonable”. The document is extensive, but the bottom line is that you can expect 2%-5% of the probate estate to be considered a reasonable fee in Virginia.
The fee of an executor is well earned. The following are some of the responsibilities of an executor:
- Document Hunting: If there is a will, but the executor doesn’t know where it is, or it hasn’t already been presented to the court, they may need to look through the deceased’s property to find it. Identifying and substantiating financial information for the decedent is also a lot of work that must be performed by the executor.
- Interested Party Notification: An executor must notify the beneficiaries of the will, as well as any possible heirs, if they exist (such as spouse, children, siblings, or parents), and even if they are not named in the will the heirs get notice of probate.
- Property Management and Valuation: One of the executor’s responsibilities is to protect the property from loss; thus, they must ensure that the item is kept safe. Executors must collect any of the deceased person’s property in possession of others. They may also need to hire an appraiser to determine the value of property.
- Documentation and Reporting: It is critical for executors to keep detailed records of everything done on behalf of the estate. The executor must prepare a list of the deceased’s assets in a formal inventory and present it to the Commissioner of Accounts (the court appointed person who reviews the information). The same Commissioner will review accountings of the estate such as any payouts and expenses, as well as any revenue produced by the estate following the deceased’s death.
- Creditor Satisfaction: Once the all the assets and the creditors have been identified, executors must pay the deceased’s debts from the estate funds. This must be done with caution. If there is not enough money to pay all the bills, the executor can be personally liable for any incorrect payments.
Avoid the burden to family by appointing a financial institution
Sometimes, the testator (the formal name for the person who creates the will) appoints a financial institution such as a bank or trust company to take care of estate administration. A financial institution is not obliged to accept an appointment as executor in the will, however, and may refuse to serve if they are unfamiliar with the circumstances.
If the testator desires to name a financial institution as executor, they should meet with the company ahead of time to discuss their plans and determine if the institution would accept the appointment. If the estate is managed by a financial institution, know that each institution will have a fee schedule (and will vary by institution). You can expect the fee to vary based on the estate’s overall value and sometimes the complexity.
Including the fee calculation in your will
A particular method for calculating the fees paid out to this person, such as a percentage or a specific sum, can be included in the will. Unless the compensation is excessive, it is usually approved by the probate court. Similarly, if the will expressly disallows compensation, then any named executor will not likely be permitted a fee or it will be greatly limited.
Attend a workshop
If you’re interested in learning more, we invite you to attend our free probate workshop. The workshop is available “on demand” and covers some of the key areas where people make mistakes. If a loved one has recently died, and you need answers about how to proceed, please contact us so we can help. We offer a complimentary consultation for families trying to navigate probate.